Blog outlining massive fraud in the Australian listed investment company (LIC) and broader financial sector

Thursday, 21 November 2013

van Eyk funds "invest" in each other

van Eyk funds are engaged in revaluation fraud, using crossholdings and circular trading to artificially inflate assets. Listed van Eyk Blueprint Alternatives Plus (VBP.AX) feeds money into unlisted van Eyk funds that it can revalue at will. Various van Eyk funds then divert funds back into VBP. VBP is a circular investment scheme, a ponzi that pays dividends depending on how many units it can issue. In countries governed by the rule of law, VBP's circular investment scheme would already have led to fraud charges. ASIC has flatly refused to take any action whatsoever. van Eyk's fund empire deliberately overstates its assets by millions of dollars using internal crossholdings, by having its listed and unlisted funds fraudulently "invest" in each other.

According to its 2013 cash flow statement, VBP received $2.6m in dividends and interest from its related party "assets", with entirely reasonable and sustainable management expenses of $5.6m. VBP then paid $16m in distributions, made possible by $19m net inflows from unitholder applications.

According to its annual report, VBP had total assets of $275m in 2013, $68m of which mysteriously consisted of receivables from brokers for securities sold, with $168m in the unlisted van Eyk Blueprint Alternatives Plus fund. These "assets" conspicuously fail to generate cashflows, which does not deter "investors" from buying VBP. The top 20 shareholders of VBP include funds such as van Eyk Blueprint Balance, van Eyk Blueprint High Growth and van Eyk Blueprint Capital Stable. This is open fraud, only possible because of ASIC's ongoing gross negligence and incompetence.

Aurora funds management is the responsible entity for VBP, acting as van Eyk's accomplice in this circular investment scam, but has lately started to distance itself from van Eyk. Following those noises, on 21 November Aurora tersely announced a meeting for unitholders to consider the replacement of Aurora as responsible entity.